Sign extension is a step in
(D) is the answer. Sign extension (filling the upper bits using the sign bit) is needed while increasing the number of bits for representing a number. For positive numbers, $0$ is extended and for negative numbers $1$ is extended.
@ rajoramanoj, only increasing the number of bits is not enough along with it we also have to maintain the sign of number.
@Anmol 300 books will be dispatched this month...